Press Release

October 3, 2001

Research In Motion Reports Second Quarter Results and Announces Filing of Normal Course Issuer Bid

Waterloo, ON - Research In Motion Limited (RIM) (Nasdaq: RIMM, TSE: RIM), a world leader in the mobile communications market, today reported results for the second quarter ended September 1, 2001 (all figures in US dollars and Canadian GAAP).

Revenue for the second quarter of fiscal 2002 was $80.1 million, an increase of $37.6 million or 88% from $42.5 million in the corresponding quarter last year. This increase was primarily due to sales of the BlackBerry™ wireless email solution, which accounted for approximately 68% of revenues in the quarter and RIM Wireless Handhelds™, which accounted for 24%. The remaining 8% of revenue was comprised of OEM radio modems and other revenue. Revenue for the six months ended September 1, 2001 was $157.1 million, an increase of $87.5 million, or 126%, over revenue of $69.6 million for the same period in the prior year.

The total number of BlackBerry subscribers increased to 246,000 as at September 1, 2001. Over 12,000 companies were using BlackBerry in their organizations.

RIM has taken pre-tax provisions with respect to trade receivables and selected component inventory balances totalling $23.0 million, relating to the weakened financial condition of Motient Corporation ("Motient"), one of RIM's customers. RIM will continue to work toward collecting its receivables from Motient and realizing the maximum possible amount from excess inventory that was specific to Motient.

"I'm pleased that we were able to achieve our revenue target for the second quarter in this challenging environment," said Jim Balsillie, Chairman and Co-CEO. "Shipping our Java-based BlackBerry Handhelds for BT Cellnet's GPRS network was a major milestone as BlackBerry is now commercially available to the European market. It's unfortunate that Motient's financial problems have forced us to take a write-down this quarter but we believe that the migration to next generation networks will limit our exposure to their difficulties. We remain focused on our strategy. We believe in the strength of our competitive advantage and we believe RIM is positioned to perform well in this difficult economic climate."

Additionally, due to continued weakness in macroeconomic and financial market conditions, RIM has determined that some declines in the values of certain of its long-term investments are other than temporary in nature. As a result, RIM has recorded a write-down of $5.35 million to adjust the carrying values of these investments.

Proforma net income for the quarter was $3.8 million or $0.05 per share compared to a net loss of $1.6 million or $0.02 per share in the same quarter last year. For the six months ended September 1, 2001, proforma net income was $7.7 million or $0.10 per share.

"The provisions related to our Motient accounts receivable and inventory components is prudent given their going concern issues," said Dennis Kavelman, Chief Financial Officer. "We will act carefully to attempt to mitigate these losses where possible. The write-down of long-term investments is a reflection of the extreme difficulties that small cap companies, such as the companies we have invested in, are having executing their strategies and raising capital in this business environment."

After reflecting the above charges in income, the net loss for the quarter was $17.5 million or $0.22 per share, compared to a loss of $1.6 million or $0.02 per share in the prior year. For the six months ended September 1, 2001, the net loss was $13.7 million or $0.17 per share, compared to $1.2 million or $0.02 per share for the same period last year.

Gross research and development expenditures, before cost recoveries attributable to government research and development incentive programs, were $11.0 million or 14% of revenue, compared to $9.6 million or 12% in the prior quarter and $5.3 million or 13% of revenue in the same period of the previous year. Increased expenditures are attributable to the completion and launch of RIM's GPRS handheld for Europe, ongoing development of next generation products and services and increased expenditures in research and development infrastructure and support.

Proforma selling, marketing and administrative expenses were $21.3 million, or 27% of revenue for the quarter compared to $21.9 million, or 28% of revenue in the previous quarter and $15.7 million, or 37% of revenue in the second quarter of last year. Expenses have increased over the prior year as RIM continues to hire personnel to support the Company's sales and distribution channels, including the ongoing expansion of RIM's European operations and worldwide GPRS deployment. Increased expenses have also resulted from additional direct sales personnel, increased sales support, continuing marketing initiatives and increased infrastructure expenditures to support the Company's present growth.

Cash, cash equivalents and marketable securities were $672.9 million at September 1, 2001 as compared to $698.6 million in the previous quarter. The net decrease of $25.7 million reflects changes in working capital and acquisitions of $20.1 million in capital assets during the quarter.

The Company's Board of Directors today approved the repurchase by RIM, from time to time, on the Nasdaq National Market, of up to an aggregate of 5,000,000 common shares over the next 12 months, pending required regulatory approvals. As of the date hereof, RIM has 78,469,652 issued and outstanding common shares. Purchases may commence on Thursday October 4, 2001. The Board of Directors of RIM believes that the proposed purchases are in the best interests of the Company and its shareholders, and are a desirable use of corporate funds. All common shares purchased by RIM will be cancelled.

Highlights of the second quarter:

  • BT Cellnet launched BlackBerry service for corporate customers in the UK in September. Material quantities of RIM's GPRS BlackBerry began shipping to BT Cellnet in the UK in August. BlackBerry is running over BT Cellnet's GPRS network.
  • RIM and Sun Microsystems, Inc. announced RIM's implementation of Java 2 Micro Edition ("J2ME") as the core operating system for the BlackBerry Wireless Handheld. RIM demonstrated the first wireless handheld based entirely on J2ME at the JavaOne conference in June.
  • DADA S.p.A. and RIM announced a collaboration to introduce BlackBerry Enterprise Edition™ to the Italian market. Through this agreement, Wireless Solutions S.p.A., DADA's Mobile Technology subsidiary, intends to release BlackBerry in Italy by early 2002 and develop customised, vertical applications for the solution.
  • Computer Associates International, Inc. ("CA") and RIM announced an agreement to enhance CA's Unicenter to extend its infrastructure management solution to include BlackBerry. This will enable IT administrators to track BlackBerry handhelds like any other IT asset - effectively enabling them to deploy, manage and support the installation and upgrade of BlackBerry applications, files and operating systems.
  • Aether Systems and RIM announced plans to work with Siebel Systems, Inc. to deliver Siebel eBusiness applications on BlackBerry Wireless Handhelds.
  • PeopleSoft Inc. announced new mobile technology called the PeopleSoft Mobile Agent, usable through BlackBerry Wireless Handhelds. PeopleSoft Mobile Agent represents a new mobile technology that will enhance client/server solutions for enterprise mobile applications.
  • AvantGo is now shipping three new products to enterprise customers for BlackBerry Wireless Handhelds, including: AvantGo 4.0 M-Business Server and Client to access enterprise applications and corporate data behind the firewall; AvantGo 4.0 Applications Alerts for pushing HTML email application alerts; and AvantGo Mobile Sales for extensions to customer relationship management applications.
  • RIM and Neomar announced an expanded strategic alliance in which the companies will offer Fortune 1000 companies the ability to securely access additional enterprise applications via BlackBerry.

Highlights subsequent to quarter end:

  • Hewlett-Packard and RIM announced plans to jointly develop mobile printing applications for BlackBerry and HP printers. HP Mobile Enterprise Printing will enable customers using BlackBerry to print emails and email attachments on network printers located within their businesses' intranet while they are away from their desk or office.

About Research In Motion

Research In Motion® Limited is a leading designer, manufacturer and marketer of innovative wireless solutions for the mobile communications market. Through development and integration of hardware, software and services, RIM® provides solutions for seamless access to time-sensitive information including email, messaging, Internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers around the world to enhance their products and services with wireless connectivity. RIM's portfolio of award-winning products includes the RIM Wireless Handheld™ product line, the BlackBerry™ wireless email solution, embedded radio-modems and software development tools. Founded in 1984 and based in Waterloo, Ontario RIM operates offices in Canada, the United States and England. RIM is listed on the Nasdaq Stock Market (Nasdaq: RIMM) and the Toronto Stock Exchange (TSE: RIM). For more information, visit www.rim.net. Investors may contact investor_relations@rim.net. Customers may contact info@rim.net.

For more information:
Contact RIM Investor Relations at (519) 888-7465 or investor_relations@rim.net.

Research In Motion, RIM, the RIM logo, the RIM Wireless Handheld family of marks, BlackBerry and the BlackBerry logo are trademarks of Research In Motion Limited. Research In Motion, RIM and 'Always On, Always Connected' are registered with the U.S. Patent and Trademark Office. All other brands, products and company names mentioned herein may be trademarks or registered trademarks of their respective holders. Forward-looking statements in this news release are made pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, risks relating to possible product defects and product liability, risks related to international sales and potential foreign currency exchange fluctuations, continued acceptance of RIM's products, increased levels of competition, technological changes, dependence on intellectual property rights and other risks detailed from time to time in RIM's periodic reports filed with the United States Securities and Exchange Commission and other regulatory authorities.

Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)

Proforma Consolidated Statements of Operations and Retained Earnings
Excluding Motient one-time charge of $23.0 million and write-down of long-term investments of $5.35 million

  For the three months ended For the six months ended
  September 1, 2001 August 31, 2000 September 1, 2001 August 31, 2000
  (unaudited)
         
Revenue $80,059 $42,521 $157,064 $69,619
Proforma cost of sales 49,062 25,377 96,702 40,335
 
Proforma gross margin 30,997 17,144 60,362 29,284
 
         
Expenses        
Research and development, net of government funding 7,648 3,816 14,945 6,441
Proforma selling, marketing and administration 21,323 15,664 43,209 26,068
Amortization 3,885 1,891 7,297 3,253
 
  32,856 21,371 65,451 35,762
 
         
Proforma loss from operations (1,859) (4,227) (5,089) (6,478)
         
Investment income 7,076 3,102 16,243 5,991
 
Proforma earnings (loss) before income taxes 5,217 (1,125) 11,154 (487)
Proforma provisions for income taxes 1,401 500 3,489 750
 
Proforma net income (loss) $3,816 $(1,625) $7,665 $(1,237)
 
         
Proforma earnings (loss) per share        
   Basic $0.05 $(0.02) $0.10 $(0.02)
 
   Diluted $0.05 $(0.02) $0.09 $(0.02)
 
Weighted average number of common shares outstanding (000's)        
   Basic 78,437 71,421 78,387 71,322
   Diluted 83,097 N/A 83,265 N/A


Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)

Consolidated Statements of Operations and Retained Earnings

  For the three months ended For the six months ended
  September 1, 2001 August 31, 2000 September 1, 2001 August 31, 2000
  (unaudited)
Revenue $80,059 $42,521 $157,064 $69,619
Cost of sales 65,162 25,377 112,802 40,335
 
Gross margin 14,897 17,144 44,262 29,284
 
         
Expenses        
Research and development, net of government funding 7,648 3,816 14,945 6,441
Selling, marketing and administration 28,223 15,664 50,109 26,068
Amortization 3,885 1,891 7,297 3,253
 
  39,756 21,371 72,351 35,762
 
         
Loss from operations (24,859) (4,227) (28,089) (6,478)
         
Investment income 7,076 3,102 16,243 5,991
 
Loss before write-down of long-term investments and provisions for income taxes (17,783) (1,125) (11,846) (487)
Write-down of long-term investments 5,350 - 5,350 -
 
Loss before provisions for income taxes (23,133) (1,125) (17,196) (487)
Provisions (recovery) for income taxes (5,614) 500 (3,525) 750
 
Net loss $(17,519) $(1,625) $(13,671) $(1,237)
 
         
Loss per share        
   Basic and diluted $(0.22) $(0.02) $(0.17) $(0.02)
 
Weighted average number of common shares outstanding (000's)        
   Basic and diluted 78,437 71,421 78,387 71,322


Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)

Consolidated Balance Sheets

As at September 1, 2001 February 28, 2001
  (unaudited)
Assets    
Current    
Cash and cash equivalents $422,733 $508,822
Marketable securities 250,125 213,105
Trade receivables 54,831 50,268
Other receivables 11,805 13,894
Inventory 57,946 68,044
Prepaid expenses and other assets 6,924 8,711
 
  804,364 862,844
 
     
Capital assets 134,236 95,208
Future income tax assets 22,598 12,011
 
  $961,198 $970,063
 
     
Liabilities    
Current    
Accounts payable and accrued liabilities $44,165 $45,892
Income taxes payable 7,325 3,842
Deferred revenue 7,374 10,870
Current portion of long-term debt 345 198
 
  59,209 60,130
     
Long-term debt 12,021 6,328
 
  71,230 67,130
     
Shareholders' equity    
Capital stock 891,720 891,014
Retained earnings (deficit) (1,752) 11,919
 
Total shareholders' equity 889,968 902,933
 
  $961,198 $970,063
 

Note: Certain comparative numbers have been reclassified to conform to the current period's classification.